In an exclusive discussion with CryptoSlate, Charlie Lee, the creator of Litecoin, shares his compelling vision for how Bitcoin and Litecoin fundamentally challenge governmental control and revolutionize global transactions. He passionately argues that cryptocurrency represents the most superior form of money ever created.
One of the most frequent critiques leveled against Bitcoin is its limited throughput. The network's maximum capacity is constrained to approximately 3 to 7 transactions per second (TPS). During periods of high network congestion, this can cause transaction fees to surge, sometimes exceeding $5 for a single confirmation.
Critics often draw a comparison with VISA. The leading payment processor handles an average of around 2,000 TPS, with a peak capacity capable of reaching 56,000 TPS.
These scalability concerns are the primary catalyst behind the existence of many altcoins. Projects such as Bitcoin Cash, EOS, and TRON promote higher transaction throughput—albeit at the cost of greater centralization—claiming to resolve the core challenges inherent in Bitcoin's base layer.
Contrary to many altcoin founders, Litecoin's creator Charlie Lee holds a markedly different and more nuanced perspective on the scalability debate.
“Bitcoin and Litecoin work perfectly fine right now as a store of value, and it's relatively easy to pay and relatively inexpensive compared to a wire transfer, for example.”
According to Lee, Bitcoin's primary value proposition isn't to directly compete with payment processors like VISA, but rather to disrupt the legacy infrastructure of banks and financial institutions.
“Today, if I want to send a huge amount of money abroad, I have to do a wire transfer. It costs $20-35 per transfer, and it takes half a day. You have to jump through hoops to make that happen. And it can be censored and potentially even reversed.”
Moreover, over time, Charlie Lee predicts that second-layer solutions like the Lightning Network will effectively address many of the throughput challenges present on Bitcoin's main chain.
Meanwhile, other proponents have argued that Bitcoin is not a competitor to VISA or PayPal.
“It competes with sovereign governments, legal systems, and property rights—the foundational layers of the existing [societal] stack—not with the payment processors that sit on top of it,” argued Hasu, a well-known (anonymous) Bitcoin researcher in his essay Bitcoin and the Prospect of Independent Property Rights.
Lee seems to concur, stating that Bitcoin already provides immense utility by replacing wire transfers.
“With Bitcoin, you get an uncensorable, permanent transaction that costs $1, even if you want to send millions. Compared to a wire transfer, it's ridiculously better.”
A prominent Bitcoin critic, Peter Schiff, consistently argues that gold is the superior store of value, with a track record spanning thousands of years. The CEO of Euro Pacific Capital makes the case that gold is the ultimate hedge against inflation and monetary debasement.
In stark contrast, Lee argued that between Bitcoin and gold, “it's not even close.” The reasons are obvious upon closer examination.
Verifying gold's authenticity is costly, it requires massive centralized institutions to secure and transport it efficiently, and it's easy for governments to confiscate. Bitcoin and Litecoin solve these fundamental problems. And, in doing so, have tremendous potential for growth, according to Lee.
“Gold's market cap is almost $10 trillion. So gold has 30-50 times the market capitalization of Bitcoin. So, Bitcoin still has a lot of room to grow. And it's doing things very well right now.”
Prior to the advent of cryptocurrency, Charlie Lee argued that money was under the strict control of governments.
“You can't use it for certain activities because the government says you can't. And it's difficult to move money around.”
As an example, prior to discovering Bitcoin, Charlie Lee describes the infamous “online poker ban incident.” In April 2011, the owners of the three largest online poker sites—PokerStars, Full Tilt Poker, and Absolute Poker—were indicted, and the sites were shut down over allegations of money laundering and bank fraud.
“It was probably lobbied by Vegas or other casinos, where online poker was cutting into their profits,” he said.
But it wasn't the arrests that stopped online poker, added Lee. People used to access these services using dollars, sending money via credit card and wire transfer. So the real way the U.S. government stopped people from accessing these services was by blocking payments.
“Anything moving from banks to these poker sites was being effectively censored because the government says it's illegal. And that really highlighted the fact that it's not really your money.”
Today, thanks to Bitcoin, Litecoin, and other cryptocurrencies, governments can't stop online services through the censorship of payments. Another example he provided was the rise of Silk Road and other darknet marketplaces—the proving ground for Bitcoin's resilience and utility.
Both Bitcoin and Litecoin have been used for purchasing drugs, laundering money, and financing illicit activities. Still, in spite of intense scrutiny from the most powerful governments in the world, these networks continue to operate.
To emphasize the scale of this pressure, the founder and operator of Silk Road, Ross Ulbricht, was sentenced to double life imprisonment, plus forty years, without the possibility of parole. Cryptocurrency can circumvent these controls because no single entity controls it and no one person is culpable for the entire network. Whereas for Silk Road, Ulbricht takes the blame.
“I see cryptocurrency as freedom of money. Compared to the internet, for example, which is freedom of information. Cryptocurrency frees people's money,” argued Lee.
Many financial regulations exist to prevent the financing of terrorism, crime, and other activities that harm the public good. As such, it's fair to ask whether cryptocurrency jeopardizes the public good by removing an enforcement mechanism.
“It will definitely be a net positive for society,” Lee responded. “I think money should be free. But, if you're doing something illegal then that should be stopped. But not through censorship of money.”
There are times when regulations overstep the boundaries of what's acceptable, he argued. Policing people's personal choices—especially those that don't harm others, like drug use and online gambling—is an affront to individual liberty and vulnerable to government overreach.
“I feel like people should be able to do whatever they want with their own bodies, as long as it doesn't harm anybody else. And it's their money, so they should be able to do it.”
Lee draws another parallel to the internet. “It's like the censorship of information,” he continued.
“For example, the Chinese government censors online information so their citizens don't know what's actually going on. Because they don't get the real information, they effectively get fed propaganda and lies. That's just wrong.”
Bitcoin and Litecoin offer people a fundamentally new way to transact, independent of the state. At some point, people won't even know they're using cryptocurrency to pay for goods and services, Lee argued.
“In the future, people will be using Bitcoin and Litecoin and not even know what's happening in the background. Whether or not they're even using Bitcoin or Litecoin, all they care about is that they're sending money from themselves to someone else for goods and services.”
Ultimately, Charlie Lee asserts that cryptocurrency is a paradigm shift with the potential to fundamentally change money forever.
“I see cryptocurrency as freedom of money…. I'd like to see that paradigm shift happen, where cryptocurrencies become the dominant paradigm, where everyone will use it as money. It's just the best form of money we've ever seen.”
